What Do I Need to Start a Limo Business?

by Charmayne Smith, Demand Media

The black Lincoln Town Car is an ideal selection for corporate and airport clientele.

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Starting a limo business can be fairly simple if you have the right resources in place. Remaining in business, however, can be fairly challenging, if you are not prepared. A successful limousine business involves much more than just driving around town. It involves exceptional service, punctuality and great attention to detail.

Limousines

Obviously, your limo business requires limousines. Still, before you go out and purchase a fleet, you have to determine how your limo business will operate. If you intend on subcontracting your business to another limo company that already has vehicles in place, you may not need any limousines. However, if you intend on securing limousines for your company, you should take great consideration into the transaction. Quality limousines are expected to be new and in pristine condition. You should purchase your limousines rather than leasing, to avoid mileage restrictions and fees. Your limousine selections should include a Lincoln Town Car and a 10-passenger stretch variety, as recommended by Bill Goerl, as these vehicles are commonly requested by clients.

Insurance

Business insurance is essential for your limousine business, regardless of how it operates. For full protection, you should select a general business insurance policy, as well as a for-hire livery insurance policy. The general business insurance policy will cover your business in business contracts, liquor liabilities, business interruptions and workers compensation. The livery insurance provides specialized protection for your fleet of limousines. It also provides coverage for the drivers and passengers of your fleet, as well as protect for potential damages and injuries that may occur as a result of the driver’s fault. Livery insurance can difficult to secure and often take several months to put in place. Therefore, before your purchase your fleet, you should secure your insurance so that it is effective at the time of your limo purchase.

Business Cards And Marketing

The limousine business comes with seasonal fluctuations, with the highest sales occurring during the prom and wedding seasons. To maintain a successful limo business, however, your business must have steady, year-round clientele. In this, your business cards and marketing strategies become essential. It is important that you have marketing materials in place to promote your business. Whether you scout clientele from corporate businesses for airport transportation or market to wedding planners and funeral homes, your business must maintain consistent marketing to maintain consistent income.

Legal

Your limousine business will require a federal tax identification number, issued by the Internal Revenue Service. This number is required by the IRS to report tax payments and to complete your year-end tax filing for your limo business. If you intend on establishing credit and securing financing for your limo business, you will also require a DUNS number that is issued by Dun & Bradstreet. This unique number is used to by lenders and institutions to report your credit activity and payment history.

Banking

Your limo business will require a business banking account to process client payments and operation expenses. It is important that you have the ability to accept credit card payments, as this is the standard payment method in the industry. Credit card payments serve as guaranteed payments for your company and provide the client with protection, if services are disputed.

Parking

Parking is an aspect of the limo business that should not be forgotten. The success of your limo business is greatly dependent upon the perfect condition of your vehicles. Your limo storage should be spacious enough to park the vehicles without scratching or denting them. It is also ideal to store the limos in a garage or covered area to protect them from weather damage.

Considerations

Many considerations come with a successful limousine business. Along with the aforementioned items, you should consider business tax deductions, state-specific livery regulations and customer service. Rather than wait until you find the need for these aspect, you should address them before they occur. A business mentor will experience in the limo business can serve as an excellent resource. If you do not have a mentor available, use SCORE’s free mentor services for guidance and assistance.

About the Author

Writing professionally since 2004, Charmayne Smith focuses on corporate materials such as training manuals, business plans, grant applications and technical manuals. Smith's articles have appeared in the "Houston Chronicle" and on various websites, drawing on her extensive experience in corporate management and property/casualty insurance.

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